If households believe their incomes will fall in the future, the result is a
A) rightward shift in the supply of loanable funds curve.
B) leftward shift in the supply of loanable funds curve.
C) movement along the supply of loanable funds curve.
D) movement along the demand for loanable funds curve.

Question

Quizplus · Accepted Answer

If households expect their incomes to fall in the future, they are likely to save more now to prepare for the anticipated decrease in income. This increased saving behavior shifts the supply of loanable funds curve to the right.

If Households Believe Their Incomes Will Fall in the Future